The New York Department of Taxation & Finance recently issued an Advisory Opinion stating that a financial services firm providing integrated portfolio management services to institutional clients in exchange for a single charge is not required to collect New York sales tax. The Advisory Opinion is a potentially important limitation of the so-called “bundled transaction” rule.

In this instance, the firm provides portfolio management, risk analysis, data transmission and related services under a bundled fee. It also provides a similar but more limited risk analysis product as a stand alone product for a fee. When it provides the stand alone product, it collects New York sales tax. The Department ruled that when viewed as a single, integrated transaction, the bundled investment services should be treated as nontaxable information technology operations and management services.

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